‘Since the Betamax decision of the Privy Council, people feel that they’ll ultimately see the light at the end of the tunnel’

BAI’s Case at the Brussels Court of First Instance

By Lex

Dawood Rawat, former Chairman lost a second round in his battle against the Government of Mauritius with regard to the takeover by the authorities in 2015 of the BAI Group. This time, it was before the Brussels Court of First Instance, after his first setback before the the United Nations Commission on International Trade Law. Is that the end of the road for the former BAI’s Chairman, or are there other options for him to fight the BAI’s case?

* The former Chairman Emeritus of the BAI Group has met with another setback in his legal battle against the Government of Mauritius regarding the takeover of the BAI Group. The Tribunal de première instance de Bruxelles (Brussels Court of First Instance) has ruled that the United Nations Commission on International Trade Law (UNCITRAL) was right in declaring that it was not competent to hear Dawood Rawat’s case. In simple language, what does the ruling say, and what are the reasons on which it is based?

Dawood Rawat based his claim by invoking the 1973 Convention between the Government of the French Republic and the Government of Mauritius Concerning the Protection of Investments. Though he is a Mauritian national, he invoked his French nationality that he acquired in 1998 to seek the protection of the Convention.

Briefly, what the Arbitral Tribunal and the court said was that the predominant nationality of Mr Rawat was Mauritian, not French, and therefore he could not avail himself of the provisions of the Bilateral Investment Treaty (BIT), that is the France – Mauritius BIT (1973).

* What could the reasons behind Dawood Rawat’s recourse to the UNCITRAL initially, and thereafter to the Brussels Court of First Instance?

Mr Rawat invoked breaches of the Investment Promotion Treaty entered into on 22 March 1973 between the Republic of France and Mauritius. He started the arbitration under the 1976 UNCITRAL Arbitration Rules through the Most Favoured Nation clause in the France-Mauritius treaty and the arbitration clause in the 2007 Agreement between the Government of the Republic of Finland and the Government of Mauritius on the Promotion and Protection of Investments. The decision of the Arbitral Tribunal was reviewable by a court of law.

Presumably he felt and was advised that he could use his French nationality to proceed with the arbitration.

* The ruling of the Tribunal de première instance de Bruxelles brings Dawood Rawat back to square one. Is that the end of the road for him?

Depending on what his lawyers will advise him, he may go to the Court of Appeal and ultimately to the Supreme Court (Cour de Cassation) in Belgium. The award was decided purely on points of jurisdiction that required the legal interpretation of different treaties.

* Would he have stood a better chance to seek redress locally at the level of the Supreme Court?

The way Mr Rawat was treated at the time by the local authorities, with an international warrant through Interpol issued for his arrest, one wonders if he would have stood a chance to start legal proceedings here…

One should also not forget the treatment meted out to his daughters and sons-in-law, arrested on flimsy pretexts and jailed. Ultimately no evidence of any offence was found against them. It’s not surprising that those actions gave rise to the perception that the police were just acting at the bidding of the government that took power in 2014.

As we still believe in the independence of our judiciary, yes, he might have stood a chance here.

* If the outcome before the Supreme Court would had been unfavourable to Mr Rawat, he could have had recourse to the Privy Council, isn’t it?

Ultimately, on the assumption that Mr Rawat had filed a case before the Supreme Court of Mauritius, and he was unsuccessful, he could always have had recourse to the Privy Council.

Since the Betamax decision of the Privy Council, people feel that they’ll ultimately see the light at the end of the tunnel. Rightly or wrongly, it’s for litigants to decide.

* What options are available to foreign investors based in Mauritius to contest a public decision or to arbitrate in a commercial dispute between private parties?

The general rule is for agreements to contain an arbitration clause. With regard to investments by a French national, for example, the 1973 Convention the Protection of Investments provides in its article 9 that —

 ‘Agreements concerning investments in the territory of one Contracting State made by nationals, companies or other bodies corporate of the other Contracting State shall contain a clause providing that, in cases where an amicable settlement cannot be reached within a short time, disputes arising in connexion with such investments shall be brought before the International Centre for Settlement of Investment Disputes so that they may be settled by means of arbitration in accordance with the Convention on the settlement of investment disputes between States and nationals of other States.’

In cases where we do not have a treaty to provide for such a clause, the rule is for agreements to have an arbitration clause. But care must be taken as to how the clause is drafted and what law will govern the arbitration.

* It’s said that the most common way for resolving disputes is court litigation, and in many cases, it’s the best choice. Does the Betamax case confirm this view?

Look at what happened to the Betamax contract that contained an arbitration clause governed by the laws of Mauritius. The Supreme Court was quick to invalidate the award.

Investors will no doubt have to choose a jurisdiction that is pro-enforcement award, unlike Mauritius that has earned a negative image of anti-enforcement award. The damage has been mitigated by the Privy Council but not removed completely.

If we really mean business in matters of investments, we have to give serious thought to all these issues.

* Was arbitration an option in the case of the BAI, or would it have required prior agreement between the BAI and the Government to go for arbitration in case of dispute?

There could not be an agreement as there was no contract between the BAI and the government of Mauritius. The decision to seize his assets was a unilateral one on the ground that he had a concocted a Ponzi-like scheme.

As Mr Rawat was persona non grata in Mauritius, he resorted to the 2007 Agreement between the Government of the Republic of Finland that allows an investor to go directly to arbitration without the agreement of the other party.

Article 9 (2) of the Finland Treaty provides that if the dispute has not been settled within three months from the date on which it was raised in writing, the dispute may, at the choice of the investor, be submitted to the competent courts of the Contracting Party in whose territory the investment is made; or to arbitration by the International Centre for Settlement of Investment Disputes.

* The report of the commission on inquiry on the sale of Britam of the BAI Group has apparently been submitted to the President of the Republic, four years after the Commission was set up in May 2017. It must have been a complex case to have taken four long years, right?

Possibly. But if you appoint the same persons to chair commissions of inquiries and to preside over other bodies, how do you expect the work to be done within a reasonable time?

* We have yet to take cognizance of the conclusions of the commission of inquiry on the former President of the Republic, Ameenah Gurib-Fakim. Could there be a reason for the time that a commission of inquiry takes to submit its conclusions

This is the problem that arises when you assign a commission of inquiry to a sitting judge. The inquiry on the former president of the Republic has political and constitutional ramifications. The three sitting judges have a heavy case load to deal with, and then they are landed with a heavy inquiry. What can we expect?

* Published in print edition on 6 July 2021

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